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China Telecommunications Report Q1 2010
Market |
Telecommunications |
Report Type |
Market Research |
Country |
China |
Published |
3 December 2009 |
Number of Pages |
94 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
China’s telecoms operators will continue to face a tough operating environment due to aggressive pricing, and the deployment of 3G infrastructure. All three major operators, China Mobile, China Unicom and China Telecom have reported that they are not likely to turn a profit in 2009 or 2010, as they invest significant funds, running into billions of US dollars, into the deployment of their 3G networks and services.
While network expansion into rural areas continues, which has led to a price war erupting as operators (particularly China Mobile) aim to secure their market shares, there has emerged similar competitive pressures in the 3G market. The mobile market leader announced that it would be increasing its handset subsidies nearly threefold in 2010 to more than CNY30bn (US$4.4bn), after feeling threatened by second-ranked China Unicom’s launch of the Apple iPhone in October 2009.
With a 3G subscriber base of 1.655mn at the end of September 2009, China Mobile remains the market leader in the 3G sector. The operator plans to spend CNY120bn on handset subsidies in 2009, of which the majority would go on TD-SCDMA. It has been procuring new handset models, with the operator revealing that it wanted to have 100 different models available to subscribers. In the first half of 2009, it laid out CNY50bn on subsidising handsets, of which just under 12% went to TD-SCDMA handsets.
As its competitors have begun to deploy their 3G services, China Mobile remains concerned that its TDSCDMA service will prove unpopular. The operator is hoping to achieve 10mn 3G subscribers by the end of 2009 and that it could reach 80mn by 2011. BMI believes these figures to be overly optimistic. We forecast that, by 2009, 3G will account for 0.3% of the total mobile market before reaching 7.5% in 2014. We have revised our fixed-line forecast, following data for August 2009 released by the MII showing there were 325.98mn fixed lines in service. This represented a loss of 14.824mn since YE08. BMI forecasts a total of 317.743mn by YE09, which represents 23.4% of the total. By the end of 2014, penetration rates will have dropped to 16.1%. This rate of growth is being dictated by the demand for mobile services, which has become increasingly affordable and in some cases undercuts that of fixed-line rates. Also making mobile increasingly attractive is the decision by China Telecom in September 2009 to cancel all roaming fees from October 1 2009.
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